Stablecoins are their own thing.
Japan's Financial Services Agency (FSA) has clarified how stablecoins should be treated and traded under Japanese law, and it's not in the same way as other cryptocurrencies.
Two key laws apply to cryptocurrencies in Japan.
First, the Fund Settlement Law classifies cryptocurrencies as a means of payment, which makes them exempt from consumption tax.
Second, the Payment Services Act means that cryptocurrency exchanges must register with the FSA. The rules of registration and the process of authorization to operate as a cryptocurrency exchange in Japan were tightened[1] in May 2018.
The FSA recently confirmed[2] to news.Bitcoin.com that stablecoins are a bit different. The FSA said: "In principle, stablecoins pegged by legal currencies do not fall into the category of 'virtual currencies' based on the Payment Services Act."
Due to the characteristics of stablecoins, the FSA has said "it is not necessarily appropriate" for them to suggest what stablecoin operators need to "obtain or register before issuing stablecoins." For exchanges offering stablecoins, the FSA added: "Generally speaking, companies need to register as the 'Issuer of Prepaid Payment Instruments' or the 'Funds Transfer Service Providers' based on [the] Payment Services Act."
"Prepaid payment instruments" fall into two categories: They are either for a business' own use or for provision to a third-party business. The two categories have their own reporting and registration requirements.
"Fund transfer service providers" are allowed to perform transactions of less than the equivalent of $9,000 without a banking license. Transactions over $9,000 must be conducted by an authorized bank.
The tighter controls implemented by the FSA in May 2018 for cryptocurrency exchanges were to protect Japanese investors from attacks like the $500 million Coincheck hack[3] of
